In the Matter of the Estate of Arthur E. Brown
153 A.3d 242
| N.J. Super. Ct. App. Div. | 2017Background
- Arthur Brown (born c.1929) entered a nursing home in April 2008 and received $166,981.25 in Medicaid benefits from July 1, 2008 until his death April 14, 2013. DMAHS filed a priority lien against his estate for reimbursement under N.J.S.A. 30:4D-7.2.
- Arthur and his wife Mary held a jointly-owned condominium; Arthur conveyed his interest to Mary in February 2008 as part of Medicaid planning. The condo sale proceeds and other assets passed to Mary and were part of her probate estate when she died testate in September 2010.
- The County Welfare Agency deemed the condominium exempt for Medicaid eligibility and found Arthur eligible effective July 1, 2008. The CWA later claimed Arthur had effectively waived an elective share and imposed a transfer penalty; administrative proceedings were initiated but Arthur died before resolution.
- Thomas Brown (son and personal rep for Mary; next-of-kin for Arthur) sued in Probate to discharge the Medicaid lien, arguing (1) Arthur lacked a right to an elective one‑third spousal share under N.J.S.A. 3B:8‑1, (2) the elective share could not be exercised after death, (3) the condo proceeds and other transfers were excluded from Mary’s augmented estate under N.J.S.A. 3B:8‑5, and (4) certain assets should reduce Arthur’s elective share under N.J.S.A. 3B:8‑18.
- The trial court held (1) Arthur was entitled to an elective share despite institutionalization and physical separation, (2) the elective share was an asset of Arthur’s estate recoverable by DMAHS under federal and state Medicaid estate‑recovery law, (3) the condo sale proceeds and other transfers were included in Mary’s augmented estate, and (4) several post‑death benefits (group life, irrevocable funeral trust, state death benefit) were not deductible from the elective share because Arthur did not own or control them at Mary’s death.
- The Appellate Division affirmed the final judgment, denial of reconsideration, and the remand calculation of Arthur’s one‑third elective share (reduced by certain owned assets), rejecting Thomas’s arguments on each point.
Issues
| Issue | Plaintiff's Argument (Thomas) | Defendant's Argument (DMAHS) | Held |
|---|---|---|---|
| Whether Arthur was disqualified from an elective one‑third share under N.J.S.A. 3B:8‑1 because he and Mary were "living separate and apart" or could have given rise to a divorce cause | Arthur and Mary were separated; Arthur’s institutionalization/Alzheimer’s meant they ceased to cohabit and/or met statutory divorce grounds, so no elective share | The separation was for care reasons, not marital breakdown; mere physical separation or institutionalization for illness does not bar the elective share | Arthur retained elective‑share rights; separation for medical institutionalization alone did not create a quasi‑divorce or disqualify him |
| Whether the elective share right, being exercisable during the surviving spouse’s lifetime, is not part of the decedent’s estate and therefore not subject to Medicaid estate recovery | The elective share is personal and exercisable only during Arthur’s life; Estate had no interest after death | Federal/state Medicaid law and NJ statutes define "estate" broadly to include legal interests the decedent had at death; an unexercised elective share is an interest subject to recovery | Elective share constituted an asset/interest in Arthur’s estate and was subject to DMAHS lien and recovery |
| Whether transfers (deed conveying Arthur’s condominium interest to Mary and other transfers) were transfers by the decedent excluded from Mary’s augmented estate under N.J.S.A. 3B:8‑3 and 3B:8‑5 | The deed and transfers were made with Arthur’s written consent/joinder; thus proceeds should be excluded from Mary’s augmented estate | N.J.S.A. 3B:8‑3 applies to transfers by the decedent (Mary), not transfers by the surviving spouse; Arthur’s transfer to Mary is not an excluded decedent transfer | Transfers from Arthur to Mary were not transfers by the decedent and were included in Mary’s augmented estate |
| Whether certain assets (group life policy, irrevocable funeral trust, NJ death benefit) should be deducted from Arthur’s elective share under N.J.S.A. 3B:8‑18(a) | These items were owned by Arthur and thus must reduce his elective share to zero | At Mary’s death Arthur did not own, control, or derive benefit from these assets; they were not property of Arthur at that time | The judge properly refused to deduct those items because Arthur did not own or have control/benefit of them at Mary’s death |
Key Cases Cited
- Estate of DeMartino v. Div. of Med. Assistance & Health Servs., 373 N.J. Super. 210 (App. Div.) (explaining federal/state Medicaid estate‑recovery requirements)
- Mistrick v. Div. of Med. Assistance & Health Servs., 154 N.J. 158 (discussing state compliance with federal Medicaid standards)
- In re Estate of Hersh, 195 N.J. Super. 74 (App. Div.) (separation for many years and remarriage found to defeat elective share)
- Carr v. Carr, 120 N.J. 336 (explaining when separation and a pending divorce action defeat elective‑share rights)
- Potomac Ins. Co. of Ill. ex rel. OneBeacon Ins. Co. v. Pa. Mfrs.' Ass'n Ins. Co., 215 N.J. 409 (standard of de novo review for statutory interpretation)
- Cesare v. Cesare, 154 N.J. 394 (trial court factual findings binding if supported by substantial credible evidence)